How did Canadian rent rates fare in 2022?

Canadian rent prices saw a record pace of growth last year amid the market’s lowest vacancy rate in more than 20 years, according to the Canada Mortgage and Housing Corporation.

In 2022, the Canadian purpose-built rental market saw its average monthly rent rate (two-bedroom) shoot up by 5.6% annually to reach $1,258. During the same period, the vacancy rate fell to 1.9%, its lowest level since 2001.

“Higher rent growth was widespread geographically, with particularly large jumps observed in Vancouver and Toronto,” CMHC reported. “This reflects higher flows of immigrants to these centres, among other factors.”

The average monthly rents for two-bedroom purpose-built condo apartments in Vancouver ($2,002) and Toronto ($1,779) remained the highest in Canada, CMHC said.

Across the country, average rent growth for purpose-built two-bedroom units that turned over to a new tenant was much higher (18.3%) than the gains seen in rent for units without turnover (2.9%).

“This reflects the fact that, once a tenant vacates a unit, landlords are generally free to increase asking rents to current market levels,” CMHC said. “Landlords can also take the opportunity to renovate between tenants. In doing so, they raise unit quality and can then ask for higher rents from new tenants.”

The Canadian economy — and the inflation rate, in particular — also had a significant influence on rental market dynamics.

“The 12-month change in the all-items Consumer Price Index stood at 6.9% in October 2022,” CMHC said. “This growth outpaced growth in the average hourly wage (5.6%) over the same period. The resulting pressure on real household wages would likely have increased the housing affordability challenges faced by renters.”